Case Law Details
Daurala Sugar Works Vs Commissioner of Central GST (CESTAT Allahabad)
The case of Daurala Sugar Works vs. Commissioner of Central GST before CESTAT Allahabad revolves around the classification of bagasse and its impact on CENVAT credit entitlement.
Daurala Sugar Works, engaged in sugar and molasses production, also generates electricity using bagasse, an agricultural by-product. The central issue was whether bagasse qualifies as a manufactured item under Chapter 17 of CETA, 1995. The appellant contested the reversal of CENVAT credit on inputs used in generating electricity sold to UP Power Corporation Ltd., citing bagasse’s non-dutiable nature upheld by the Supreme Court in previous judgments.
The dispute escalated when the Department demanded Rs. 6,04,07,447 under Rule 6(3)(i) of CCR, 2004, arguing the Appellant should have maintained separate records for inputs used in manufacturing exempted goods (electricity). The appellant, having reversed Rs. 39,78,832 in CENVAT credit under Rule 6(3A) for the period 2009-10 to 2013-14, sought refund post the quashing of the SCN by Allahabad High Court.
The High Court’s order in favor of the appellant was pivotal, asserting bagasse’s non-dutiable status and dismissing the Department’s demand. Subsequently, the appellant filed a refund application, contested by the Assistant Commissioner on grounds of limitation under Section 11B of CEA, 1944.
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